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Eli Lilly Tops Estimates With Government Purchases of Covid Treatment

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GuruFocus.com
·2 min read
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- By Graham Griffin

Pharmaceutical manufacturer Eli Lilly and Co. (NYSE:LLY) has released strong earnings thanks to high demand for cancer and diabetes treatments alongside government purchases of its Covid-19 antibody treatment.

On Friday, the company reported fourth-quarter revenue of $7.44 billion, up 22% from the year-ago quarter. Earnings came in 41% above year-over-year figures at $2.32 per share. Non-GAAP earnings were $2.75 per share, which beat estimates of $2.35 per share according to CNBC.


Eli Lilly Tops Estimates With Government Purchases of Covid Treatment
Eli Lilly Tops Estimates With Government Purchases of Covid Treatment

"Lilly closed a complex year by delivering impressive results in the fourth quarter of 2020," Eli Lilly Chairman and CEO David Ricks said. "We finished the year with strong momentum in our core business areas, as volume-based revenue growth for our newest medicines and initial sales of our COVID-19 antibody therapy, coupled with our ongoing productivity agenda, drove robust margin expansion and solid earnings growth."

The company's bamlanivimab Covid-19 antibody therapy was granted emergency use authorization by the Food and Drug Administration. Upon the approval, the U.S. government committed to purchase 1.45 million doses of bamlanivimab in total by Marcg 31. Overall, the antibody therapy drew in $871.2 million in revenue for the company during the quarter, surpassing the expectation of $813 million by Mizuho analysts.

Eli Lilly also had several other drugs beat expectations during the quarter. Diabetes treatment Trulicity saw a 24% increase in revenue to $1.50 billion, flying past estimates of $1.39 billion according to Refinitiv. The company's cancer treatment Alimta also beat estimates of $560 million with total revenue reaching $652.7 million.

The fourth quarter saw company-wide operating expenses increase 3% as funds were targeted toward research and development. This included $265 million dedicated solely to developing Covid-19 therapies.

Looking forward to 2021, the company expects earnings per share to be in the range of $7.10 to $7.75 on a reported basis. Revenue is expected to be in the range of $26.5 billion to $28 billion, including $1 billion to $2 billion from Covid-19 therapies.

On Jan. 29, the stock was trading at $205.96 with a market cap of $196.84 billion. The GF Value Line shows the stock trading at a significantly overvalued level.

Eli Lilly Tops Estimates With Government Purchases of Covid Treatment
Eli Lilly Tops Estimates With Government Purchases of Covid Treatment

Top gurus invested include the Vanguard Health Care Fund (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Hotchkis & Wiley (Trades, Portfolio).

Eli Lilly Tops Estimates With Government Purchases of Covid Treatment
Eli Lilly Tops Estimates With Government Purchases of Covid Treatment

Disclosure: Author owns no stocks mentioned.

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This article first appeared on GuruFocus.